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Customer Relationship Management - Kenyatta University

Roger Baran Christopher Michael Zerres Customer Relationship Management Download free books at Download free ebooks at Relationship Management2 Customer Relationship Management Roger Baran, DePaul University , Chicago Christopher Zerres, Universit t Kassel Michael Zerres, Universit t Hamburg 1. History and theory Customer Relationship Management (CRM) is growing in importance due to the challenging business environment faced by organizations throughout the world today. It is particularly critical in industries undergoing changes in traditional channel configuration.

CRM is part of an evolution in corporate thinking that began with the Enterprise Resource Planning (ERP) initiative of the 1990 s. ERP forces all resources within a corporation to work within one busi-ness system. In the 1990 s, over $300 billion was spent on centralizing, standardizing and organizing

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Transcription of Customer Relationship Management - Kenyatta University

1 Roger Baran Christopher Michael Zerres Customer Relationship Management Download free books at Download free ebooks at Relationship Management2 Customer Relationship Management Roger Baran, DePaul University , Chicago Christopher Zerres, Universit t Kassel Michael Zerres, Universit t Hamburg 1. History and theory Customer Relationship Management (CRM) is growing in importance due to the challenging business environment faced by organizations throughout the world today. It is particularly critical in industries undergoing changes in traditional channel configuration.

2 CRM is a means of addressing increasing competition, changing economic conditions and promotional dependence through the use of intimate Customer knowledge; knowledge gained through Relationship development and past marketing pro-grams. CRM is increasing in prominence because it focuses on current users who are the source of the majority of business revenue and the best option for improving business in uncertain times. There are a number of working definitions for CRM. In fact the letters CRM have been used to iden-tify Continuous Relationship Marketing, Customer Relationship Marketing and Customer Relationship Management .

3 Each term represents the same process. CRM can be defined as a process that maxi-mizes Customer value through on-going marketing activity founded on intimate Customer knowledge established through collection, Management and leverage of Customer information and contact history. CRM is about perfecting relationships to maximize a Customer s value over time. History and theoryStand out from the crowdDesigned for graduates with less than one year of full-time postgraduate work experience, London Business School s Masters in Management will expand your thinking and provide you with the foundations for a successful career in programme is developed in consultation with recruiters to provide you with the key skills that top employers demand.

4 Through 11 months of full-time study, you will gain the business knowledge and capabilities to increase your career choices and stand out from the are now open for entry in September more information visit email or call +44 (0)20 7000 7573 Masters in ManagementLondon Business SchoolRegent s ParkLondon NW1 4 SAUnited KingdomTel +44 (0)20 7000 7573 Email your careerPlease click the advertDownload free ebooks at Relationship Management3 CRM is part of an evolution in corporate thinking that began with the Enterprise Resource Planning (ERP) initiative of the 1990 s.

5 ERP forces all resources within a corporation to work within one busi-ness system. In the 1990 s, over $300 billion was spent on centralizing, standardizing and organizing information and resources throughout corporations. The results, however, have been mixed in terms of payout. What is indisputable is that the information system processing skills acquired in im-plementing ERP programs enabled many organizations to support CRM and E-commerce program-ming; initiatives not in existence when ERP began. CRM was developed, in large part, as a result of data mining, or segmentation and targeting research, made possible from the centralization of cus-tomer records.

6 Organizations began to realize that they could better serve customers since they better understood customers. CRM has benefited from advances in data Management and middleware new software that allows disparate data resources to work as a single integrated database. CRM has also been supported by a new generation of promotional tools; for example, selective binding, variable valuation and new prob-abilistic targeting tools such as Spectra. In the , CRM is now practiced by approximately 45% of the companies in retailing, aircraft and utilities; 50-55% of the companies in financial services, phar-maceuticals and transportation; and 70% of the companies in telecommunications and credit.

7 The development and popularity of electronic marketing as a tool has produced a rich source of con-sumer data for access by organizations in many industries. Focusing on the retail grocery industry in the , Frequent Shopper Programs (FSP s), are used by grocery retailers who comprise over 60% of the All Commodity Volume. They have produced consumer files that will be the key to more profit-able grocery promotion for them in the future. Companies like Safeway, Kroger and American stores are heavily invested in these programs.

8 Frequent shopper programs in the grocery industry developed as loyalty program extensions. These programs are consumer card-based programs that track pur-chases based on the use of scanners and reward customers with discounts based on brands purchased. These programs were developed to provide customers with an additional reason to increase their share of purchase in a particular chain of stores. The concept of Customer lifetime value, the money value of a Customer Relationship over time, has evolved to enable savvy direct marketers the opportunity to differentiate the profit potential for each of the various market segments that they serve.

9 Loyalty marketing has always focused on the fact that retaining and improving business with current consumers costs less than acquiring new customers. Customer retention, as a strategy, is founded on the ability to segment and differentially target current users to improve the value of the Relationship for both seller and buyer. Lifetime value is calculated by identifying the revenue stream over a period in time, applying a reten-tion rate for each year, subtracting total cost and then applying a discount rate to gross profit in order to determine the net present value of a Customer .

10 The calculation is completed for a number of years using different retention rates. Midas Mufflers uses Customer lifetime value as the backbone for their direct marketing efforts. Midas tracks cars based on vehicle mileage and contacts customers to remind them of service and brake opportunities over the life of their vehicle. There is a difference between Frequent Shopper Programs and Loyalty Focused Programs. For exam-ple, in the grocery industry today, the focus for supermarkets is on promotion rather than on the development of comprehensive loyalty programs.


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